JOHANNESBURG, Sept 12 (Askume) – Cell C, South Africa’s fourth-largest mobile operator, is confident it has enough cash to repay shareholder loans as they mature over the next three to five years while executing a turnaround plan.
Under Chief Executive Jorge Mendes, the once-beleaguered company is undergoing another recapitalization aimed at achieving financial independence from majority owner Blue Label Telecom (BLUJ.J) .
Chief Financial Officer L. Cope said Mendes said the group’s free cash flow before debt is expected to turn positive in about two months, while operating cash flow will be fundamentally positive.
“This is a very good situation because it allows us to stop having to borrow money to run the business,” Mendez said in an interview late Wednesday.
“We’re now starting to look at ways to address long-term debt, shareholder debt, but without risking harm to the operating business.”
Blue Label acquired a 45% stake in Cell C in 2017 for 5.5 billion rand (about $307 million) and raised its stake in 2022 after lending R1.03 billion to Cell C to repay some of its debt for a 49.53% non-controlling stake . It also provides working capital.
Kopey said Cell C currently has about R5 billion in shareholder loans and less than R2 billion in lease obligations on its balance sheet.
“We will not seek funds from shareholders to repay the debt. We are now confident that we can reach an agreement,” Kopp said.
Mendes said Cell C’s prepaid revenue “has started to show recovery” in 2024 after experiencing year-on-year declines over the past three to four years, and attributed the “incremental growth” to initiatives such as price increases and adjustments to sales pipeline strategies.
Mendez said the company also hopes to franchise most of its 44 company-owned stores and retain three to four stores. There are 107 stores in total.
(1 USD = 17.9273 Rand)
